If President Obama wants to avoid an economic calamity next year, he could always show up at a news conference bearing two shiny platinum coins, each worth . . . $1 trillion.

Okay, that sounds utterly insane. But some economists and legal scholars have suggested that the “platinum coin option” is one way to defuse a crisis if Congress cannot or will not lift the debt ceiling soon. At least in theory.

It sounds utterly insane because, well … it is utterly insane. Apparently, acts of insanity are totally legal in the US, though, as long as they’re committed by a Treasury Secretary:

Enter the platinum coins. Under current law, the Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.

Under this scenario, the U.S. Mint would make a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.

“I like it,” said Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”

In theory, this is much like having the central bank print money. But, Gagnon said, the U.S. government would simply be using the money to keep spending at existing levels, so it would not create any extra inflation. And if it did cause problems, the Fed could always counteract the effects by winding down some of its other programs to inject money into the economy.

There’s nothing obviously problematic about it, except for the fact that we’re going to devalue world’s baseline currency by about two trillion dollars. How exactly can that avoid stoking inflation? It creates money that hasn’t been in circulation before, and it spends it almost immediately based on the completely artificial valuation of a couple of coins in a vault. If it didn’t fund new spending, no one would need to create the coins and the artificial value of them in the first place. The spending done under the debt limit comes from the sale of bonds, which may be a bad way to run government but actually have some future value based on a commitment from the Treasury. The two coins are a bad parody of that process, and it won’t be long before bond investors discover that the joke is on them.

And it’s not as if this solution hasn’t been tried in the past. In the 1920s, facing crushing debt and war-reparation obligations, the Weimar Republic in Germany did exactly the same thing: printed money to pay off their obligations. They just didn’t do it with cool-looking platinum coins. It destroyed the savings of the middle class, created massive poverty and a flight from German currency, and set the stage for the takeover by the Nazis a few years later.

These are the kinds of ideas that arise when governments go bankrupt, politically if not financially. How about some real solutions, like reducing spending to FY2000 levels as a percentage of GDP and reforming the tax system to fund government appropriately? Steven Crowder asked a few people about the options on the table in his latest vox populi, and ended up discovering that some Democrats may want to check in on their party’s policies:

Update: Added a bit more to the first paragraph after the second excerpt.

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“I like it [paying off treasury debt with two platinum one trillion dollar coins] ,” said Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”

I’m laughing hysterically at this “reasoning”, because otherwise I would cry.

Under this scenario, the U.S. Mint would make a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.

“I like it,” said Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”

I really thought I had heard it all. I thought it just couldn’t get any more Alice In Wonderland, down the rabbit hole.

These highly-edited videos from scum like Steven Crowder, Jason Mattera, and Jesse Watters are the epitome of conservative dishonesty. You could go into any crowd of people, ask them questions on camera, choose the stupidest statements, mash them all together, and then laugh about how dumb your “opponents” are, as if the video is representative of any group or ideology. Damn, it feels good to annihilate a straw man, doesn’t it? But given Ed’s “reporting” of the election and economic news, no wonder he likes Steven Crowder so much. Doesn’t matter if it’s right or wrong–if it feels good, do it, baby!!

You all know where liars go according to the religion most conservatives follow, right?

OK. Obviously this is a seriously stupid idea on so many levels both economic and political.

But WTF!?!? Could the media be so in the tank that they would let him get away with this?? I know this question is worn out, but if a republican president floated this idea as even remotely possible, the press would crucify him or her….

The next step of the insane in terms of fictitious currency? (Remember, the government is essentially counterfeiting $40 billion a month of non-existent money under QE3!) If they do this, just let me know when they are scheduled to be delivered to the Treasury department….
I guess Obama could claim to have found them in the cushions of a White house sofa!

Scum seems a little harsh. No one is claiming that this is the prevailing view, just that some people are confused by what they are hearing. Cripes, if you believed in this stuff you would think that California is a huge hot mess based on Jay Leno’s “Jay Walking” portion of his show. Still, it is disappointing to know that there are enough stupid people in the country to reelection The Won, so I can see why you are so touchy.

These people are as bad as the college kid at an Obama rally who said he was voting for Obama for his foreign policy, but when they asked him how he felt Obama reacted to Benghazi- he didn’t know what Benghazi was.

/facepalm. These are the idiot who blame Repubs when Dems are in power.

If producing these platinum coins and depositing them into the treasury does not create inflation unless we change our spending levels, then why not immediately make 20 of these coins, pay off our entire debt, and have enough money left over to cover the deficit for the next few years? Then all you have to do is leave spending levels where they are and, voila, debt crisis solved!

These highly-edited videos from scum like Steven Crowder, Jason Mattera, and Jesse Watters are the epitome of conservative dishonesty. You could go into any crowd of people, ask them questions on camera, choose the stupidest statements, mash them all together, and then laugh about how dumb your “opponents” are, as if the video is representative of any group or ideology. Damn, it feels good to annihilate a straw man, doesn’t it? But given Ed’s “reporting” of the election and economic news, no wonder he likes Steven Crowder so much. Doesn’t matter if it’s right or wrong–if it feels good, do it, baby!!

You all know where liars go according to the religion most conservatives follow, right?

No no no no. You’re all missing the point. The coins are printed, then immediately used to pay off debt. The money never goes into circulation. It just allows us $2 trillion more dollars to spend because we paid off the debt with the money we just printed!

It creates money that hasn’t been in circulation before, and it spends it almost immediately based on the completely artificial valuation of a couple of coins in a vault.

Ed, it does a couple other things that apparently you have not considered. First off, let’s start with a basic fallacy you have made. All printed or coined money has an arbitrary value assigned to it by those with the authority to authorize the printing or coining of said money.

Second, and more important, the coining of a monetary unit placed in reserve upon which fractional deposit and distribution of facsimile representation of said reserve currency would represent a de facto return to a precious metal standard of currency. Rather than the Gold Standard which the Ronulans long for, this would be a Platinum Standard.

I do not believe that the POTUS has the authority to create a Platinum Standard, if my memory serves me correctly, that falls squarely under the responsibilities specifically designated to the House of Representatives in the Constitution of the United states (Article 1, Section 8).

It’s interesting that you’d make these comments after Obama’s re-election campaign was based on attack ads filled with lies and distortions aimed at low information voters.

It’s also interesting that you’d bring up the intelligence of liberals – a group of people who don’t seem to understand or care that Obama is bankrupting our country. A group of people who think that “making the rich pay their fare share” will cover the 1+ trillion annual deficit.

You’re right… “scum” is a little harsh, and I regret using that word. But I absolutely stand by everything else in my post. The difference between these three and Leno (or others that might do these “man on the street” style interviews) is that Leno is a comedian; it is purely for comedic effect. These guys are political activists. And they get picked up by big conservative media outlets, such as Hot Air and FOX. And yeah, I’m sure it’s supposed to have a humorous element, but the overall tone is, “look how ignorant these ‘low information voters’ on the other side are.” It reinforces stereotypes about “libruls” that exist only in the conservative mind.

In theory, this is much like having the central bank print money. But, Gagnon said, the U.S. government would simply be using the money to keep spending at existing levels, so it would not create any extra inflation.

Even if you buy this economic theory you’d also be required to believe that spending isn’t going up (which it does automatically because of baseline budgeting) and that Obama and Democrats don’t want to spend more money (which Obama’s latest fiscal cliff ‘offer’ does).

Hey at least they actually said what they said. Tea Party folks are called racists just for disagreeing the Obama’s fiscal policies. So you don’t like it when Steward and Colbert, edit clips to make Republicans look bad, right?

You know it and I know it but does Alpha Male know it? May I point out that that is obviously a name picked for irony since all he ever does is whine like a girl. Cindy Munford on December 7, 2012 at 11:05 AM

Well, in the crowds he travels in, being the alpha male is not that big a deal.

I’m sure it’s supposed to have a humorous element, but the overall tone is, “look how ignorant these ‘low information voters’ on the other side are.” It reinforces stereotypes about “libruls” that exist only in the conservative mind.

Alpha_Male on December 7, 2012 at 11:08 AM

You guys don’t even realize that you do that all by your little self. Do you often wonder why you don’t get banned on this site unlike how some of us have been treated on the Daily Kos? It is because we know the more you talk the more you sound like uninformed emotional ignorants. We have no problem hearing your views on things.. More light shed on ignorant statements; the more we win.

You’re right… “scum” is a little harsh, and I regret using that word. But I absolutely stand by everything else in my post. The difference between these three and Leno (or others that might do these “man on the street” style interviews) is that Leno is a comedian; it is purely for comedic effect. These guys are political activists. And they get picked up by big conservative media outlets, such as Hot Air and FOX. And yeah, I’m sure it’s supposed to have a humorous element, but the overall tone is, “look how ignorant these ‘low information voters’ on the other side are.” It reinforces stereotypes about “libruls” that exist only in the conservative mind.

Alpha_Male on December 7, 2012 at 11:08 AM

I can’t wait for your diatribe against Jon Stewart.

How about major news organizations which spread the most outlandish but unproven claims about Tea Party rallies but cover up the nastiness on display at Occupy rallies? Or major news organizations which selectively edit 911 phone calls to make a Zimmerman sound like a racist?

These highly-edited videos from scum like Steven Crowder, Jason Mattera, and Jesse Watters are the epitome of conservative dishonesty. You could go into any crowd of people, ask them questions on camera, choose the stupidest statements, mash them all together, and then laugh about how dumb your “opponents” are, as if the video is representative of any group or ideology.

Please tell me what point in the video it claims that the people were representative of an entire ideology. That way I don’t have to rewatch the whole thing looking for it because I missed that statement in my first viewing somehow.

So you’re telling me that Steven Crowder puts these videos together because he’s a comedian looking for a laugh, and not because he has a political agenda?

Alpha_Male on December 7, 2012 at 11:13 AM

And you’re telling me that you don’t think Leno has an agenda other than to make people look ignorant on TV? Colbert? Stewart?

Here’s a hint: if you don’t like the agenda, don’t watch the video. But this is a pretty universally-used mechanism for all sorts of agendas. Crabbing about Steven’s use of it as if it’s somehow different makes you look distinctly beta-ish.

I do not believe that the POTUS has the authority to create a Platinum Standard, if my memory serves me correctly, that falls squarely under the responsibilities specifically designated to the House of Representatives in the Constitution of the United states (Article 1, Section 8). SWalker on December 7, 2012 at 11:06 AM

So you’re telling me that Steven Crowder puts these videos together because he’s a comedian looking for a laugh, and not because he has a political agenda?

Alpha_Male on December 7, 2012 at 11:13 AM

Oh get off it. People ON YOUR side use the “but I am a comedian” all the time but have a political agenda. Does Bill Maher, John Stewart and Stephen Colbert ring any bells. Don’t act all superior mmkay, because your side does it to. Remember that stupid movie by Bill Maher religulous or what ever. He never talked to any actual theologians only the ignorants on the street. Get off your high horse, come down from your pedastal and quit whining mmkay!

These videos are pure character assassination. I suggest you all read this letter by a thoughtful student at Fordham University, which was recently misrepresented and smeared by Bill O’Reilly and Jesse Watters.

You could go into any crowd of people, ask them questions on camera, choose the stupidest statements, mash them all together, and then laugh about how dumb your “opponents” are…

Alpha_Male on December 7, 2012 at 10:48 AM

Did you actually watch the video?
The point wasn’t “look at these complete idiots!” it was that if you ask politically uninformed people who identify as Democrats about policies with no political label they think the current GOP plan and other conservative ideas look like a good idea.

Character assassination? Character assassination is calling Mitt Romney a murderer and a tax-cheat felon, not putting people on camera anonymously to show their responses. You certainly do get hysterical for an alpha male, but at any rate, you’ve derailed the discussion for long enough.

These videos are pure character assassination. I suggest you all read this letter by a thoughtful student at Fordham University, which was recently misrepresented and smeared by Bill O’Reilly and Jesse Watters.

These videos are pure character assassination. I suggest you all read this letter by a thoughtful student at Fordham University, which was recently misrepresented and smeared by Bill O’Reilly and Jesse Watters.

Is it an egregious slander to people that they believe that raising the debt ceiling doesn’t sound like a solution, that if you make $250,000 a year you aren’t super rich and that closing tax loopholes is a good idea?

If these are the sorts of grave insults which send you to your fainting couch then surely your Alpha Male moniker is highly ironic.

It was not much better the 2nd time you posted it. Let’s face the fact that Crowder’s video is a time tested form of mockery at the ignorance of folks who think they are smart and show how stupid they really are.

Something I have never/will never understand about folks. Most people comport themselves privately very Conservatively. Yet they seem to politically at least reject those views. This disconnect is odd. How bad is our messaging that we can’t demonstrate the irony of this? It seems to me that many people try and strive to be self reliant and responsible, yet they throw that position out the window in terms of how they vote. Why do they not realize this? What can be done to enlighten them as to their inconsistencies? Or are they hopelessly blind to it?

Hopelessly blind falls far short of the self-inflicted stupidity that comes from the need to feel socially accepted and part of the herd at the expense of ones own personal convictions, beliefs and self interests.

Hopelessly blind falls far short of the self-inflicted stupidity that comes from the need to feel socially accepted and part of the herd at the expense of ones own personal convictions, beliefs and self interests.

SWalker on December 7, 2012 at 11:41 AM

Yeppers it just isn’t “cool” to be a Repub like it is a Democrat. The funny thing is that the Democrats used to be the anti-establishment party, but they have become the establishment.

The concept of being socially accepted is very different to me I suppose. I have always put my individualism first. I have found it to be a position stronger than the sheep mentality. People are drawn to unique individuals. In good and bad ways of course. Perhaps you are correct, they are all to willing to forgo self in exchange for acceptance. This is sometimes considered an altruistic position to hold. They can make decent followers. They just require direction. We must do a better job at directing them then. How is the difficult part. We have not cracked the code on this, even though they would be very malleable and willing.

Nothing “like” about it. This IS the Fed printing money, and doing it in such a ridiculously stupid and underhanded way that it would shock the markets into cardiac arrest almost immediately.

But, Gagnon said, the U.S. government would simply be using the money to keep spending at existing levels, so it would not create any extra inflation. And if it did cause problems, the Fed could always counteract the effects by winding down some of its other programs to inject money into the economy.

LOL. This Gagnon guy is one of the dumbest people ever. Too funny … and too pathetic that someone this idiotic isn’t confined to an asylum. “winding down SOME of its other programs” … to suck up a couple trillion of freshly printed money. Sure. No problem. Easy peezy.

I would love to have this Gagnon guy over for dinner one night, just to throw food at him. His stupidity is truly amazing and totally offensive.

the U.S. government would simply be using the money to keep spending at existing levels, so it would not create any extra inflation

This guy has no idea that there are different types of inflation. This would most assuredly cause monetary inflation through added loans made from the $2 trillion deposits. The banks would be stupid not to.

The total amount of expansion that can take place is illustrated on page 11. Carried through to theoretical limits, the initial $10,000 of reserves distributed within the banking system gives rise to an expansion of $90,000 in bank credit (loans and investments) and supports a total of $100,000 in new deposits under a 10 percent reserve requirement.

So, the deposit of $2 trillion ‘could’ lead to an increased expansion of ‘loans and investments’ to the tune of $18 trillion. Would this happen, who knows. But the FED did loan out trillions without congress knowing to foreign banks, so I wouldn’t put it past them.

Like I said in my first comment, I thought it was very telling that that woman wanted to change what she said simply because her own internal sense of what was correct could be construed as a Republican view. I guess we have to congratulate the Left and their minions in the media for a job well done, it makes me want to commit a felony.